10 Reasons why Procurement should own the supplier relationship?

10 Reasons why Procurement should own the supplier relationship?

10 Reasons why Procurement should own the supplier relationship? One of the many battles in which procurement often finds itself, is its right to manage the supplier relationship. Often there is in no governance in place to support procurements claim. A claim which must be won if it is to claim its place at the top table and steer outsourcing strategy for their organisation.

Below we present a wider functional view on potential ‘decision rights’ on the supplier relationship together with 10 reasons why procurement is best placed to lead supplier relationship management:

Potential relationship ownership stakes:

SRM Interest

10 Reasons why Procurement should own the Relationship:

10 Reasons why procurement should own the supplier relationship

As a business process, procurement cuts across all the functional activities of an organisation. Its overarching claim therefore lies in providing a centre of excellence to manage this critical process, where skills, capabilities and process can be developed to maximise the value delivered by suppliers.

There are many other arguments that can be made but procurements claim is compelling and should be built upon.

Only when this case is won and accepted by the wider business community will procurement be able to say it is truly strategic.

There’s perhaps a difference between ‘owning’ and ‘driving’ or leading strategic supplier relationships.

Procurement certainly needs to drive the strategic relationship agenda with its organisations most critical suppliers. However being seen to ‘own’ that relationship does mean that robust alignment is needed between the Procurement function and the internal stakeholder area that is receiving the services from the supply organisation. That can be tricky to secure and will depend on how well Procurement is perceived by the stakeholder area.

So perhaps the focus should be on who is driving the supplier relationship forward (and how in a multi-functional approach). Ownership is a secondary issue. We see many situations where a strategic relationship is ‘owned’ by the functional stakeholder area (e.g. IT Directorate) but from a commercial leadership perspective is driven forward by high calibre team of Procurement professionals, adopting cross-functional working.

If Procurement start arguing the case for ownership prematurely, before it can demonstrate that it can successfully drive the relationship forward, then expect to see some barriers go up from some stakeholders.

Perhaps its a bit like cars. Many of us drive cars we don’t own. And indeed some times own cars that we don’t drive often, but others do.

David, thanks for a well thought through position that demonstrates understanding of the issues involved. Procurements maturity and its perception by stakeholders is key to securing the necessary alignment. For most this is currently aspirational, but the profession needs to aim for this level of capability and alignment.

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